The European Parliament has voted to allow individual EU countries to reduce the rate of VAT on e-books to match the rate on printed books.
Previously e-books have not been eligible for a reduced VAT rates - which printed publications such as books and newspapers enjoy - because they are classified as an “electronic service”. In the UK, for example, e-books attract a 20% VAT charge, where print books have a zero-rate of VAT, which has long been seen as unfair by the book trade.
After today’s vote on the proposal - which saw 590 votes for the motion and eight against, with 10 abstentions - individual countries will be allowed to align the VAT rate of e-books to the rate applicable to printed publications.
Henrique Mota, president of Federation of European Publishers, said: “In this, like in several other occasions, the Parliament has strongly advocated for ending the fiscal discrimination between print and digital books. We, the European publishers, now look at the Council to close the circle and approve the long-awaited Commission proposal”.
Now that Britain is preparing to leave the EU, Stephen Lotinga, c.e.o of the Publishers Association, has previously said that the trade body will be speaking with the government about lowering VAT on e-books in light of the EC ruling.
“The UK tax system has long recognised that VAT should not be a disincentive to reading, education and learning,” he said. “We’re pleased that the European Commission has today recognised that nation states should have the freedom to apply this principle regardless of format. We will of course be speaking to the UK government about trying to ensure that VAT is not applied to any type of book both now and after we exit the EU.”
Alan Peace, VAT partner at accounting, tax and advisory practice Blick Rothenber, said: "The newspaper and book industry, not to mention Kindle and other suppliers of e-books, will be waiting with baited breath to learn what the UK government decides to do on this issue. There are a number of possible scenarios; to reduce the VAT on e-books to zero, reduce the VAT on e-books to 5% but at the same time increase the VAT on printed books to 5%, or simply leave the rate for e-books at 20%.”